David Stockman Warns of another Big Crash

Posted by Tina

David Stockman has a new book out today in which he warns of a big wake up call sized crash headed our way. Economists, experts and Obama apologists are already accusing him of going to extremes. But I remember people saying that George Bush’s warnings about housing finance laws being a potential danger to markets and the economy were nuts so I have to take the man’s concerns to heart. Business Insider quotes David Stockman on the policy to never let a crisis go to waste:

Then, when the Fed’s fire hoses started spraying an elephant soup of liquidity injections in every direction and its balance sheet grew by $1.3 trillion in just thirteen weeks compared to $850 billion during its first ninety-four years, I became convinced that the Fed was flying by the seat of its pants, making it up as it went along. It was evident that its aim was to stop the hissy fit on Wall Street and that the thread of a Great Depression 2.0 was just a cover story for a panicked spree of money printing that exceeded any other episode in recorded human history.

Stockman worked under Ronald Reagan as Director of the Office of Management and Budget and is considered a credible and knowledgeable voice:

In his upcoming book, The Great Deformation: The Corruption of Capitalism in America [37], Stockman lays out how we have devolved from a free market economy into a managed one that operates for the benefit of a privileged few. And when trouble arises, these few are bailed out at the expense of the public good.

By manipulating the price of money through sustained and historically low interest rates, Greenspan and Bernanke created an era of asset mis-pricing that inevitably would need to correct. And when market forces attempted to do so in 2008, Paulson et al hoodwinked the world into believing the repercussions would be so calamitous for all that the institutions responsible for the bad actions that instigated the problem needed to be rescued — in full — at all costs.

If you’re concerned about your own savings and investment you should read the entire article. another can be found here. Stockman doesn’t let either political party off the hook but addresses what he sees as insane policies that have transferred the free enterprise system to a game of craps. (My words not his) You might also want to buy his book.

This entry was posted in Uncategorized. Bookmark the permalink.

4 Responses to David Stockman Warns of another Big Crash

  1. Peggy says:

    Nero fiddled while Rome burned.

    As White House Closed for Visitors, Biden & Obamas Do Vaykay a Month:

    “Without getting into the details of the Obama daughters’ multiple vacations, not only because of security issues but because the daughters should not be held accountable for the taxpayer costs (that’s on their parents), the following are just some of the vacations from 2013 for President Obama and Vice President Obama:”

    January 4-8, 2013: Vice President Biden goes to the Virgin Islands.

    January 6, 2013: The Obamas take second vacation in a month to Hawaii. Estimated cost: $3 million.
    February 15-16: President Obama travels separate from First Family for golf excursion. Estimated cost of pro lessons: $1,000/an hour.

    February 15-16: Michelle Obama and Vice President Biden take skiing vacation in Aspen, Colorado.

    March 29, 2013: Vice President Biden vacations off the coastal Carolina shores.


  2. J. Soden says:

    With mountains of debt, disappearing jobs, increase in goofernment handouts that continue to increase the debt and all the while the Fed is printing $$ like there is no tomorrow?
    Stockman is right. The only question is “When?”

  3. Peggy says:

    A Government-Centered Stock Market

    “On November 28, 2008, Charles Krauthammer wrote the following:

    In the old days — from the Venetian Republic to, oh, the Bear Stearns rescue — if you wanted to get rich, you did it the Warren Buffett way: You learned to read balance sheets. Today you learn to read political tea leaves. You don’t anticipate Intel’s third-quarter earnings; instead, you guess what side of the bed Henry Paulson will wake up on tomorrow.

    Today’s extreme stock market volatility is not just a symptom of fear — fear cannot account for days of wild market swings upward — but a reaction to meta-economic events: political decisions that have vast economic effects.

    As economist Irwin Stelzer argues, we have gone from a market economy to a political economy.

    Krauthammer cites a number of decisions made at the time regarding bank bailouts that sent stocks up and down in drastic fashion. Yet his comments could have just as easily have been made today.

    From a Wall Street Journal online discussion on Monday:
    Nursing-home operators lost as much as much as half their market value Monday after Medicare said it would reduce reimbursement rates to those facilities by 11.1% over the next fiscal year.

    When you have a government running out of money in charge of a program that has overpromised its financial benefits, this is an expected result. When you increase the size and cost of the government’s influence in health care it is harmful to the nation writ large.

    It’s not just health care. The auto industry, banks, and energy sector (oil, natural gas, and “green” energy industries alike), among other swaths of the American economy, are increasingly reliant on government decisions instead of decisions by consumers in their respective markets. Rather than compete against each other for the privilege of your dollar, they compete for the best lobbyist to convince a Congressman, Senator or bureaucrat to bestow his or her magic wand of government.

    Meanwhile, America’s economy continues to suffer, Washington grows ever more powerful, and Medicare continues to go bankrupt. Where are the real solutions? They aren’t found in Washington.”

    Complete article:

Comments are closed.